* China iron ore port stocks up for 3 straight weeks – SteelHome
* Iron ore price seen at avg $79/t this year – Australian govt (Recasts, updates with closing prices and chart)
By Enrico Dela Cruz
MANILA, July 6 (Reuters) – Iron ore futures rebounded from early losses on Monday, tracking an extended rally in Chinese stocks, which jumped to a five-year high on hopes of a quick economic recovery in the world’s top metals consumer.
However, iron ore’s gains were capped as China’s rising port inventories of the steelmaking ingredient helped soothe worries over global supply tightness that have kept spot prices at around $100 a tonne for more than a month now.
Iron ore on the Dalian Commodity Exchange closed 0.9% higher at 750.50 yuan ($106.70) a tonne, and gained 0.6% on the Singapore Exchange in afternoon trade.
Dalian iron ore gained 29% in the first half of 2020, as demand in top steel producer China rebounded after the country eased coronavirus-induced restrictions, while concerns emerged over Brazil’s mining operations.
All eyes remain on Brazilian miner Vale SA and the impact of the country’s rising tally of COVID-19 cases on iron ore production already hampered by a tailings dam disaster last year.
“Vale confirmed it will bring back most of its lost production in the coming months. This gave a signal of easing supply tightness, with rising seaborne trades (expected) in the weeks ahead,” ANZ analysts said in a note.
China’s iron ore port stockpiles, which last month hit the lowest since October 2016, have since steadily climbed to reach 109.75 million tonnes on July 3, based on SteelHome consultancy data. SH-TOT-IRONINV.
Iron ore prices are projected to average $79 a tonne, free on board Australia, this year and $65 next year as supply is likely to increase, according to the Australian government’s latest forecast.